The Invesco European Growth Fund in October 2015


Nov. 24 2015, Published 1:12 p.m. ET

Performance evaluation

The Invesco European Growth Fund Class A (AEDAX) rose 4.7% in October 2015 from a month ago. In the three-month and six-month periods ended October 30, the fund fell 3.6% and 2.1%, respectively. However, in the YTD (year-to-date) period, the fund rose by 5.6%. Also, it rose 4.1% from a year ago. However, from October-end until November 23, the fund fell 0.5%.

Even after positive returns for the one-month period to October 2015, the fund stood eighth among ten funds in this review. It didn’t fare well in the one-year period either. However, in the three-month, six-month, and YTD periods, it was among the top four performers.

Let’s look at what contributed to the fund’s poor showing in October 2015.

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Portfolio composition and contribution to returns

The AEDAX has a long track record, having been incepted in November 1997. According to its latest geographical disclosure, companies from the United Kingdom, Germany, and Switzerland are the top three invested geographies, in that order. Germany and Switzerland have switched positions from a month ago.

The latest complete portfolio available for the fund is as of September 2015. Hence, we’ll take that portfolio as our base and consider valuation changes as they stand at the end of October 2015 for our analysis. All portfolio percentages mentioned from here on refer to their weights as per changes in valuation from September to October.

Financials—the largest sectoral holding—were the biggest positive contributors to the fund’s returns for October. The preference shares of Sberbank of Russia OJSC were the biggest contributors to the sector’s returns. All sectoral holdings, except one, contributed positively.

The consumer discretionary sector followed financials in terms of the quantum of positive contribution to returns. Sky plc led the positive contributors, followed by WPP (WPPGY).

Industrials followed these two sectors, and were led by DCC plc.

Other positive contributors included SAP (SAP) and Royal Dutch Shell (RDS.B).

Reasons for poor showing

The fund’s stock picks rose in October but not in a substantial enough measure. In some cases, its top picks by weight were not the top positive contributors to returns. This appears to be what held the fund back in terms of its returns.

Let’s move on to the Columbia European Equity Fund Class A (AXEAX).


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